Theo Spierings will already be facing tough questions around Fonterra's boardroom table.

CEOs have a tendency to become a company's fall guy when board-endorsed strategies don't work.

This is not to suggest Spierings is in line for the boot.

But what's happening at Fonterra implies a fundamental strategic rethink is required at senior levels of the company which goes well beyond the radical operational measures taken late last year to ensure the company's finances stay in the black.

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Here's the thing.

On January 20 - just seven weeks ago - Spierings told Bloomberg Fonterra would maintain its $4.60 per kg of milk solids forecast payout for the current season.

On January 28, Fonterra lowered its forecast for the 2015/2016 season from $4.60 per kg of milk solids to $4.15 per kg of milk solids.

Yesterday - in what was a "black Tuesday" for the dairy company - the Fonterra chief executive announced the current season forecast payout had been reduced to $3.90 per kg of milk solids, marginally ahead of the August 2015 forecast of $3.85 per kg of milk solids which had sharply brought its farmer shareholders to the realisation that the "white gold rush" had finally collapsed.

Dividend allocations will bump up the overall payment for Fonterra's 10,500 farmer shareholders to $4.25-$4.30 per kg of milk solids for the current season. But with DairyNZ estimating farmers need a payout of $5.25 per kg of milk solids to break even - and some 80 per cent of farmers said to be under water on a cash-flow basis - this new forecast is undoubtedly a bitter pill for stressed farmers to swallow.

It is incomprehensible the Fonterra board - which does after all decide the payout level - could have persistently got it so wrong.

The company has blamed a "perfect storm" of circumstances for the pricing volatility it has experienced. Yesterday, Spierings singled out problems with lowered demand from the Chinese and Russian markets as a major factor in the global "imbalance" of the international dairy trade.

He also noted the impact of European production increasing faster than expected.

Said Spierings: "The time frame for a rebalancing has moved out and largely depends on production reducing - particularly in Europe - in response to these unsustainably low global dairy prices."

But what if production in Europe does not reduce in line with Fonterra's expectation?

Is it possible Fonterra has been comprehensively gamed by some European and US producers who have kept production up as a competitive response to the global commodity slump to push the NZ company out of its dominant position in the global dairy trade?

This point was made (much more subtly) by Finance Minister Bill English last week when he said NZ no longer had the international dairy market to itself and local producers needed to cut costs to stay competitive.

Yesterday Spierings again lowered farmers' expectations by noting that Fonterra's forecast was based on "no significant changes to either supply or demand globally before the end of the year".

He added, "however, a reduction in the supply available for export before then could mean prices recover earlier than currently expected".

Fonterra expects to reveal a "strong position" at its half-year results on March 23 where chairman John Wilson says a further round of support measures for debt-stressed farmers will also be revealed.

The company is also squeezing its major suppliers which will not endear it to local communities.

Fonterra has worked hard to overcome a reputation for arrogance which led it to be dubbed "Fortress Fonterra".

Wilson's confirmation that the company has lengthened the payment terms for 2000 of its largest contractors will have done nothing to dispel that.

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